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Since the publication of Venkatraman and Grant's (1986) article two decades ago, considerably more attention has been directed at establishing the validity of constructs in the strategy literature. However, recent developments in measurement theory indicate that strategy researchers need to pay additional attention to whether their constructs should be modeled as having formative or reflective indicators. Therefore, the purpose of this chapter is to highlight the differences between formative and reflective indicator measurement models, and discuss the potential role of formative measurement models in strategy research. First, we systematically review the literature on construct measurement model specification. Second, we assess the extent of measurement model misspecification in the recent strategy literature. Our assessment of 257 constructs in the contemporary strategy literature suggests that many important strategy constructs are more appropriately modeled as having formative indicators than as having reflective indicators. Based on this review, we identify some common errors leading to measurement model misspecification in the strategy domain. Finally, we discuss some implications of our analyses for scholars in the strategic management field.

This paper aims to analyze the impact of brand management system (BMS) practices on subjective and objective performance in both service- and product-oriented sectors.

Based on a “grounded-in-practice” approach to BMS, a comprehensive formative BMS scale is developed and its validity is assessed. The impact of BMS on subjective brand performance (i.e. predictive validity) and on objective financial performance is assessed. Data are collected from a sample of 298 brand managers and marketing directors in five business sectors (cosmetics, convenience goods, industry, bank/insurance and media) and from a financial database. Path analysis and multigroup analysis are performed to test mediating and moderating effects.

The results reveal that subjective brand performance (perceived brand performance) mediates the relationship between the BMS and objective financial performance of the firm and on each of the three BMS dimensions; and product-oriented (vs service-oriented) sector positively moderates the relationship between the BMS and subjective brand performance.

The paper offers insights into adapting brand management practices along all BMS dimensions to achieve better business performance and improve objective financial performance in product-oriented activities. It highlights the role of brand management implementation, as well as the role of brand management in hierarchical relationships, in improving performance in service activities.

The formative BMS scale offers a tool which can be used to improve strategic decisions and give practical guidance on product vs service sector specificities. The indirect impact of a BMS on financial objective performance reinforces the legitimacy of brand managers and marketing managers.

This paper shows the impact of the BMS on objective financial performance by using a “grounded-in-practice” BMS scale. It also affords explanation on sectoral effects of brand management practices and their consequences on subjective and objective performance.

The study explored various dimensions of overconfidence bias (OB) among retail investors in Indian financial markets. Further, these dimensions were validated through formative assessments for OB.

The study applied exploratory factor analysis (EFA) to 764 respondents to explore dimensions of OB. These were validated with formative assessments on 489 respondents by the partial least square path modeling (PLS-PM) approach in SmartPLS 4.0 software.

The major findings of EFA explored four dimensions for OB, i.e. accuracy, perceived control, positive illusions and past investment success. The formative assessments revealed that positive illusions followed by past investment success among retail investors played an instrumental role in orchestrating the OBs that affect investment decisions in financial markets.

The formative index of OB has several practical implications for registered financial and investment advisors, bank advisors, business media companies and portfolio managers, besides individual investors in the domain of behavioral finance.

This research provides a novel approach to provide a formative index of OB with four dimensions. This formative index can acts as an overview for upcoming researchers to investigate the OB of retail individual investors.

1. Overconfidence bias is an important predictor of retail investors' behavior

2. Formative dimensions of the overconfidence bias index.

3. Accuracy, perceived control, positive illusions and past investment success are important dimensions of overconfidence bias.

4. Modern portfolio theory and illusion of control theory support this study.

Overconfidence bias is an important predictor of retail investors' behavior

Formative dimensions of the overconfidence bias index.

Accuracy, perceived control, positive illusions and past investment success are important dimensions of overconfidence bias.

Modern portfolio theory and illusion of control theory support this study.

As good as existing measurements of entrepreneurial potential (EP) may appear in the literature, they are fragmented, suffer from the lack of theory integration and clarity, are inadequately specified and assessed and the dimensions are unordered by importance. These limitations of EP metrics have hindered entrepreneurial practice and theory advancement. There is a risk of atomistic evolution of the topic among “siloed” scholars and room for repetitions without real progress. The purpose of this paper was to take stock of existing measurements from which the authors developed a new instrument that is brief and inclusive.

The authors followed several steps to develop and validate the new instrument, including construct domain name specification, literature review, structured interviews with entrepreneurs, face validation by experts, semantic validation and statistical validation after two waves of data collected on employee and entrepreneur samples.

A clear operational definition of EP is proposed and serves as a starting point towards a unified EP theory. The new EP instrument is made up of 34 items classified into seven dimensions, which in order of importance are proactive innovativeness, management skill, calculated risk-taking, social skill, financial literacy, entrepreneurial competencies prone to cognitive and heuristic biases and bricolage. The authors provide evidence for reliability and validity of the new instrument.

Although a model is not the model, the authors discuss several ways in which the new measurement model can be used by different stakeholders to promote entrepreneurship.

The authors discuss the domain representativeness of the new scale and argue that the literature can meaningfully benefit from a non-fuzzy approach to what makes the EP of an individual. By developing a new EP instrument, the authors set an important pre-condition for advancing entrepreneurial theory and practice.

The objective of this study is to develop and test a specific conceptualization and modeling specification of web site service quality and the influence web site service quality has on e‐service provider loyalty and word‐of‐mouth.

Data from an online survey of consumers across two studies were obtained.

The results support the conceptualization and operationalization of web site service quality and its effects on word of mouth and loyalty.

Implications for the measurement of consumer perceptions of web site service quality are highlighted for researchers, and directions for future research are discussed.

E‐service providers should carefully consider customer experiences on their web sites, and their management efforts to ensure they design and deliver the appropriate levels of service quality derived through the specific components of web site service quality.

The findings are of value to e‐service practitioners managing web site service quality and offer empirical support to its formative conceptualization. The focus here on formative modeling will stimulate discussion among e‐service researchers and practitioners, which could result in richer e‐service quality measures leading to improved marketing decision making and web site quality management.

The study examines how firms may transform big data analytics (BDA) into a sustainable competitive advantage and enhance business performance using BDA. Furthermore, this study identifies various resources and sub-capabilities that contribute to BDA capability.

Using classic grounded theory (GT), resource-based theory and dynamic capability (DC), the authors conducted interviews, which involved an exploratory inductive process. Through a continuous iterative process between the collection, analysis and comparison of data, themes and their relationships appeared. The literature was used as part of the data set in the later phases of data collection and analysis to identify how the study’s findings fit with the extant literature and enrich the emerging concepts and their relationships.

The data analysis led to developing a conceptual model of BDA capability that described how BDA contributes to firm performance through the mediated impact of organizational learning (OL). The findings indicate that BDA capability is incomplete in the absence of BDA capability dimensions and their sub-dimensions, and expected advancement will not be achieved.

The research offers insights on how BDA is converted into an enterprise-wide initiative, by extending the BDA capability model and describing the role of per dimension in constructing the capability. In addition, the paper provides managers with insights regarding the ways in which BDA capability continuously contributes to OL, fosters organizational knowledge and organizational abilities to sense, seize and reconfigure data and knowledge to grab digital opportunities in order to sustain competitive advantage.

This article is the first exploratory research using GT to identify how data-driven firms obtain and sustain BDA competitive advantage, beyond prior studies that employed mostly a hypothetico-deductive stance to investigate BDA capability. While the authors discovered various dimensions of BDA capability and identified several factors, some of the prior related studies showed some of the dimensions as formative factors (e.g. Lozada et al., 2019; Mikalef et al., 2019) and some other research depicted the different dimensions of BDA capability as reflective factors (e.g. Wamba and Akter, 2019; Ferraris et al., 2019). Thus, it was found necessary to correctly define different dimensions and their contributions, since formative and reflective models represent various approaches to achieving the capability. In this line, the authors used GT, as an exploratory method, to conceptualize BDA capability and the mechanism that it contributes to firm performance. This research introduces new capability dimensions that were not examined in prior research. The study also discusses how OL mediates the impact of BDA capability on firm performance, which is considered the hidden value of BDA capability.

The purpose of this paper is to provide further validation of an alternative measurement model of brand trust and demonstrate the robustness and measurement invariance of the model in a cross-cultural context.

Survey data collected from the USA and China were submitted to the alternative measurement model. Amos 7.0 was used in testing the robustness and stability of the proposed model.

The results provide strong support for the stability and robustness of the alternative model. The multidimensional scale satisfies the minimum requirement of configural invariance and metric invariance.

The findings confirm that the multidimensional scale of brand trust can be meaningfully used in countries with distinct cultures. However, further testing may be needed given that the present study involves only two countries.

Overall brand trust is shown to be a function of consumers’ trust in specific aspects of a brand. Thus, it is imperative that brand managers make every effort to build consumers’ trust in performance competence and/or benevolent intention.

The present research demonstrates the robustness of the alternative measurement model of brand trust. It also exemplifies a way of testing a measurement model that involves a second-order construct and formative indicators.

The integration of digital technologies into education has brought about a profound transformation, fundamentally reshaping the learning landscape. The purpose of this study is to underscore the importance of investigating the factors influencing students’ engagement (SE) in this evolving digital era, particularly within formal digital learning environments. To address this need, the study is grounded in self-determination theory (SDT) and presents a comprehensive model comprising interconnected elements: digital competence (DC), smartphone use (SPU), perceived autonomy (PA), digital formal learning (DFL) and SE.

The research conducted an investigation within Saudi Arabian universities, collecting a robust data set of 392 cases. This data set underwent rigorous analysis to validate the proposed model. To untangle the intricate relationships within the framework, the study used partial least squares structural equation modelling. Given the distinct dimensions of the two constructs under study, the researcher used a disjoint two-stage approach to establish reflective-formative higher-order constructs (HOC).

The findings revealed that digital literacy and digital skills (DS) constitute the foundational constituents of DC. Simultaneously, the study identified facilitation, distraction and connectedness as integral components of SPU. Importantly, the study established that DC, SPU, PA and DFL significantly influence SE. Furthermore, the research illuminated the mediating roles played by SPU, PA and DFL in the complex relationship between DC and SE.

This study advances the literature by delineating the dynamic interplay between DC, SPU and SE in digital learning. It extends SDT within educational contexts, emphasizing the role of internal motivations and DS. Methodologically, it innovates through reflective-formative HOCs, deepening the analysis of complex educational constructs. Managerially, it guides institutions in enhancing DC and integrating smartphones effectively into learning, advocating for tailored strategies to foster engaging and autonomous digital learning environments, thereby enriching both theoretical understanding and practical application in education.

Recent marketing research provides conceptual models to investigate the well-being of collectives, but service system well-being (SSW) remains untested empirically. This research conceptualises and develops a measure for SSW at the micro, meso and macro levels.

Using a series of studies, a multidimensional SSW scale is developed and validated to ensure its generalisability. After the development of preliminary items, Study 1 (N = 435 of service employees) was used to purify items using factor analyses. Study 2 (N = 592 of service employees) used structural equation modelling (SEM) with AMOS and SmartPLS to test the scale's dimensionality, reliability and validity.

The results confirm the validity and reliability of the nine dimensions of SSW. The measure was validated as a third-order micro-, meso- and macro-level construct. The dimensions of existential and transformative well-being contribute to micro-level well-being. The dimensions of social, community and collaborative well-being contribute to meso-level well-being. Government, leadership, strategic and resource well-being drive macro-level well-being. In addition, a nomological network was specified to assess the impact of SSW on service actor life satisfaction and customer orientation.

The study contributes to services literature by theorising SSW as a hierarchical structure and empirically validating the dimensions and micro-meso-macro levels that contribute to SSW.

The SSW scale is a useful diagnostic tool for assessing levels of well-being across different systems and providing insights that can help develop interventions to improve the well-being of collectives.

The research is the first study to theorise the micro, meso and macro levels of service system well-being and operationally validate the SSW construct.

The purpose of this paper is to critically review and synthesize the scale development practices in hospitality and tourism and propose updated guidelines applicable for both reflective and composite scales.

Using a critical review of a sample of scale development papers published in six top-tier tourism and hospitality journals, the current guidelines' weaknesses and strengths and their applications are identified. Updated procedures are proposed to overcome these weaknesses.

This review showed several issues in applying existing guidelines, including incomplete and unclear data collection processes, inconsistent data analysis processes including validity/reliability assessment and lack of criteria to identify and assess composite scales. As such, this paper proposes updated guidelines by incorporating the confirmatory composite analysis to assess composite scales.

This paper offers unique theoretical and methodological contributions to scale development literature, by identifying the shortcomings of current practices of scale development and propose guidelines for both reflective and composite scales. The current scale development procedures cannot be applied for composite scales, and so the results of composite scale development using the current procedures are questionable. The updated guidelines by the current study improve new scales' accuracy, reliability and validity.